10 Questions for startups to ask a Risk Bearing Entities before entering a Value-Based Care contract

Is your startup considering a Value-Based Care contract with a Risk Bearing Entity?

Question 1: How many members do they serve?

Understanding the size and scale of a risk-bearing entity allows startups to determine if the partnership aligns with their capacity and capabilities. Serving more members might indicate large-scale opportunity for the startup but reduces sales prospects of those who lack scale.

Red Flag: Extremely low member numbers without a clear niche focus or rationale for the low numbers, suggesting limited growth potential.

Question 2: How many of those patients are in risk-based contracts?

Risk-based contracts mean the entity assumes financial responsibility for the care outcomes of their patients. Understanding if they primarily take professional versus full risk provides insight into the potential financial implications of your partnership.

Red Flag: A minimal percentage of patients in full risk contracts, indicating the entity might be less experienced and have a lower budget for population health solutions.

Question 3: What is the risk distribution by line of business?

What is their distribution of Commercial risk, Managed Medicaid, Medicare Advantage, DSNP and ACO REACH lives?

By identifying the entity’s distribution across Commercial risk, Managed Medicaid, Medicare Advantage, etc., startups can tailor their offerings to drive the most relevant outcomes for their populations. Different lines of business have unique requirements, challenges, and financial value drivers.

Red Flag: Minimal Medicare Advantage lives may indicate lack of experience, while extensive Medicaid membership imply price sensitivity to solutions.

Question 4: What demographics do they serve? Which subgroups have they already sub-delegated?

Do they take risk on pediatric, adults, seniors, high risk, homebound, or disease specific populations? Different demographics have unique care needs.

Knowing the population ahead of time can guide product/service tailoring. Understanding sub-delegation helps identify any overlapping or competing services.

Red Flag: Vague or unclear understanding of their demographics or sub-delegation processes, suggesting lack of clarity in their strategy and operational hurdles in the future.

Question 5: Which additional functions have they been delegation?

Are they delegated for utilization management, claims processing, or network contracting?

Responsibility for utilization management and/or claims processing are associated with more maturity in managed care and better access to real time data. It is important to know which risk partner (payer vs. payvider) is most aligned buyer of your solution or could measure its outcomes.

Red Flag: The regulatory burden of delegated functions (i.e. care plans) driving operational decisions and siloed work streams.

Question 6: Which population would be contracted and use your solutions?

Are subsets excluded due to competing programs or lower cost/utilization thresholds?

Startups must ensure there’s a clear understanding of the target user base. Excluded population may significantly impact initial pricing, internal resource allocation, and ability to deliver predetermined outcomes benchmarks.

Red Flag: Indications that only a tiny fraction of their population would use your solution or a lack of clarity about who the target users are.

Question 7: How do they partner with other layers of value-based care delivery?

Are they delegated for utilization management, claims processing, or network contracting?

Responsibility for utilization management and/or claims processing are associated with more maturity in managed care and better access to real time data. It is important to know which risk partner (payer vs. payvider) is most aligned buyer of your solution or could measure its outcomes.

Red Flag: The regulatory burden of delegated functions (i.e. care plans) driving operational decisions and siloed work streams.

Question 8: How quickly do they expect patients to be enrolled after contract signature?

Do they require a demonstration project on a smaller subset before accessing total population? Do their staff have incentives or contractual obligation to drive volume towards your solution?

The contracting entities enrollment urgency may not match those of front-line segments of their business. Clarifying the demonstration project’s success metrics in advance reduce the likelihood of subsequent scaling delays.

Red Flag: Unrealistically fast expectations for enrollment without providing adequate resources or support. Alternatively, prolonged, or indefinite timelines can also be a concern.

Question 9: How do they oversee and measure the impact of vendor contracts?

Do they partner through Joint Operating Committees or hold vendors accountable through quarterly performance reviews?

This question gets to the heart of accountability. Joint Operating Committees typically oversee partnership details and serve as a forum for process optimization. Quarterly reviews suggest higher expectation of startup maturity and ability to drive value from the get-go.

Red Flag: Absence of any structured oversight or measurement mechanisms, or a history of changing terms and evaluation criteria without clear communication.

Question 10: Do they have a clear ROI (Return on Investment) expectation for vendor solutions?